The directors of the failed Melbourne Rebels rugby union club must hand over nearly $2.2 million to continue their lawsuit against Rugby Australia amid claims the sports governing body was seeking “Rolls-Royce” treatment for its legal team.
The Federal Court ruling made this week will require the backers of the lawsuit – led by business magnate Leigh Clifford, the former chairman of Qantas and chief executive of Rio Tinto – to pay the money into court to ensure the costs of the blockbuster case are properly covered.
The two groups remain at loggerheads despite ongoing attempts by the Rebels’ side to settle the matter, most recently for a seven-figure sum, according to a source familiar with the negotiations but not permitted to talk publicly.
The new bill takes the security for costs orders towards $3 million after an earlier payment of $550,000 by the club.
The directors of the defunct Super Rugby club launched a damages claim against Rugby Australia in 2024 seeking $30 million and accusing the governing body of abandoning the club and causing its collapse.
The Melbourne Rebels’ directors allege Rugby Australia knowingly and unfairly underfunded the club during the pandemic and this led to its financial troubles.
They also allege Rugby Australia should not have stripped the club’s licence to play in May 2024 after the group entered administration in January that year owing creditors $23 million, which included an $11.5 million debt to the Tax Office.
The Rebels also claim Rugby Australia is responsible for the unpaid tax because it oversaw the payroll for the club and was responsible for any tax debts accrued when Rebels players were playing for Rugby Australia teams.
The dispute became particularly tense when the ATO said it would hold the Rebels’ directors – which include top solicitor Georgia Widdup, senior silk Tim North, KC, and now-bankrupt club president Paul Docherty and others – personally responsible for the massive tax debt.
The case is set down for a three-week trial next month.
Rugby Australia declined to comment on Thursday but has maintained throughout the case that it had provided the Rebels with adequate money to meet their costs and to cover their tax bill, and instead the money was allegedly misused by the club.
The Rebels strongly reject these allegations.
Rugby Australia had originally asked the court to order the Rebels team to pay $2.9 million into court, while the Rebels thought the payment should be limited to $1.65 million.
The Rebels had argued that Rugby Australia’s estimated legal costs were a “Rolls-Royce approach to litigation”, including that each member of Rugby Australia’s legal team would need $805 a night per person to stay in a hotel in Melbourne and $955 a person per flight between Sydney and Melbourne.
The cost estimate also included assumptions for two leading senior counsels, who charge a combined daily rate of $56,000.
In deciding to split the difference between the two legal cost estimates, Justice Cameron Moore said that describing the costs as Rolls-Royce might be going too far, “but I accept that the estimates are not modest”.
A spokesperson for the directors said: “The volunteer directors of the Melbourne Rebels never wanted to take legal action against Rugby Australia. We never wanted to go to court.
“All we have ever wanted to do was keep professional rugby alive in Victoria for the benefit of the rugby community, including putting $6 million of our own money into the club.”
The spokesperson said that Rugby Australia did not want the Melbourne Rebels and Rebels fans and the state of Victoria to know they “abandoned us in favour of northern states”.
“We will fight in court on behalf of all volunteers in the sporting community who passionately believe in their club, even when the administrators of their sport don’t,” the spokesperson said.
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Sarah Danckert is a senior reporter who specialises in investigations and corporate wrongdoing. She is a two-time Walkley Award winner, and has won six Quill Awards and two Kennedy Awards.Connect via X or email.